A second round of voluntary retirement at the four public sector general insurance companies -- the New India Assurance Company, National Insurance Company, Oriental Insurance Company and United India Insurance Company -- seems to be on the cards in the run up to their possible merger.

The managements of the four undertakings have appointed A F Ferguson to look into their restructuring and this, senior company officials said, "may trigger the next round of VRS".

The merger proposal was turned down by the former government during the reign of D Sengupta, former chairman of General Insurance Corporation of India. However, with private insurers eating into the share of their public sector counterparts, merger talks have re-opened, said a senior insurance official with one of the leading state-owned insurer.

"Looking at how the Life Insurance Corporation of India has been able to sustain competitive pressures largely on account of its size, it would be in the interest of the four general insurers to merge," he added.

Ferguson has been appointed following the finance ministry asking for a report from the four on the restructuring position after the first round of VRS.

Questionnaires have been distributed to employees at randomly selected offices, "to develop cadre strength norms for the four general insurance companies."

The restructuring will look into the promotion policy, merger/demerger of offices and the opening up of micro-offices, which would be run by a single employee.

In the first round of VRS, only about 14-15 per cent of employees opted for the package even though the management perceived that at least 30 per cent of the 82,000-odd employees were surplus.

The VRS offered two months' salary for every completed year or total salary for the remaining number of years left in service -- whichever is less. The minimum eligibility criterion for VRS optees was 40 years of age and 10 years of service.

The objective of the second round of VRS is to prune the 76,000-strong work force ahead of a likely merger. Bharatiya Bima Karmachari Sena Labour Wing of Shiv Sena was the first association to demand the merger, a proposal that is strongly being pushed by the Communist Party in light of the intensive competition by private insurers.

There is a move to cut down the number of branches by 10 per cent following the introduction of intermediaries such as brokers and third party administrators, which prove to be a cheaper proposition than having one's own full-fledged branch.